Is Mobile Banking Breaking the Tyranny of Distance to Bank Infrastructure? Evidence from Kenya

Is the mobile banking revolution overcoming the tyranny of distance to bank infrastructure and improving financial inclusion in sub-Saharan Africa? Focusing on Kenya, this paper uses Global Positioning System (GPS) data to investigate the importance of distance and time to bank branch for personal access to both formal banking services and the mobile banking platform M-Pesa. Evidence suggests that greater distances and time to bank infrastructure reduce the likelihood an individual is formally banked and that despite the significant expansion of the bank branch network in Kenya (2006-2009), the negative relationship between distance to bank branch and the likelihood of being banked has increased. In contrast, evidence is found to support the hypothesis that mobile banking in Kenya is overcoming the tyranny of distance to bank infrastructure for the financial inclusion of all economic groups in Kenya.